How Effective Has the Enforcement of the Whistleblower Protection Act 2010(WPA) Been in Malaysia?

by Lim Guan Eng

Political Will, National Commitment And Even Personal Obligation Rather Than A Single Law Such As The WPA Will Determine Whether Integrity In Leadership Centred On An Ethically Based Society Can Be Established

It gives me pleasure to speak to you today at this 4th Annual Corporate Governance Summit organised here in Kuala Lumpur. I have been asked to speak on the issue of the Whistleblowers Protection Act 2010 (or “WPA”) which was passed by the federal Parliament and has been in force in Malaysia since December 2010.

Many of us here who are interested in corporate governance will have been captivated by the ongoing saga of alleged corruption and mismanagement in the RM250million National Feedlot Centre project. This is a corporate governance issue as well as a national governance issue. The question is will there be any action taken or will be it just be another case of of the RM2.52 billion losses incurred by MAS without anyone being punished and even those that caused losses such as Tan Sri Tajuddin Ramli being let off the hook.

Danaharta had agreed to settle with Tan Sri Tajudin on February 14 without enforcing a High Court decision on December 2009 in Danaharta’s favour ordering Tan Sri Tajudin to pay RM589.14 million to Danaharta, over a loan taken to purchase MAS. Where is the moral hazard?

I think I can summarise my view of the WPA by saying that is not so much a Whistleblowers Protection Act but rather a “Whispering to the Police Act”. When one blows a whistle, everyone can hear. This Act is different. It only protects those who report to the police or other government enforcement agencies under conditions of secrecy. Under the WPA, a whistleblower is supposed to make a report to an enforcement agency such as the police. If the police don’t take any action, that is tough. If the police decide that action should be taken, but the Attorney-General decides not to prosecute, that again is tough. All you have as a whistleblower is the right to be notified of the authorities’ decision, and the right not to have any detrimental action taken against you.

Under the New South Wales Public Interest Disclosure Act, if no action is taken by the enforcement agencies, a whistleblower will be protected if he brings the matter to the attention of a Member of Parliament or the media. In the UK, once he has reported the wrongdoing, or if he reasonably fears retribution from his employer, there is no restriction at all on whom a whistleblower can notify as long as the disclosure in good faith and judged by an employment tribunal to have been reasonable in the circumstances.

However, in Malaysia, it is an offence punishable by a fine of up to RM50,000 and imprisonment of up to 10 years if a whistleblower or the person receiving or investigating the report discloses any information about the person accused of wrongdoing, or any other information disclosed by the whistleblower, to a third party.

Under the WPA, a whistleblower does not enjoy any protection if he decides to communicate his allegation of wrongdoing to a person other than a government enforcement agency. And under the Act, even if the report is made to a government enforcement agency, the protection can be revoked if the enforcement agency is of the opinion that the report “principally involves questioning the merits of government policy, including policy of a public body”, or if the whistleblower commits an offence under the Act, such as disclosing the contents of his report to a third party.

I think we can all see that the WPA would have had absolutely no effect in the present cows and condos scandal, as it would not have protected any whistleblower who believed that the Malaysian public deserved to know about how a RM250 million soft loan given for the rearing of cattle was used to buy luxury condominiums in Bangsar and in Singapore. Without any media and public pressure, it is clear that no action would ever be taken and the allegations of wrongdoing in the NFC issue would simply have hushed up by the authorities.

But yet another issue that faces any whistleblower in this country is the fact that any information gained from government sources is routinely deemed to be an official secret, the disclosure of which is punishable under the Official Secrets Act 1972 by imprisonment of a minimum of one year and a maximum of seven years. This is not by any means a hypothetical risk. In 1979, my own father was convicted under the Official Secrets Act when he revealed the purchase price paid by the Government in a Swiss arms deal, though the minimum punishment of one year’s imprisonment was not yet then in place.

Such information should be made public. Whilst any person who has been unjustly defamed or maligned by malicious and false police reports should have the right to sue, the authorities should make available to the truthful whistleblower or the “lying” whistleblower as well as to the public all information obtained from such investigations. Even I was sued by the late Tan Sri Eric Chia when I exposed the RM 5 billion Perwaja scandal but I did not obtain the requisite information from the authorities.

The test should always be whether there is real public loss of funds. If there is then the protective safeguards should be in force. If none, then the whistleblower is merely whistling in the wind. More importantly, the MACC or any body authorised to conduct such investigations must be independent, possess powers to prosecute and free from any political oversight and accountable only to Parliament.

It is obvious to me, and I hope also to you, that the WPA will always be ineffective in fighting corruption and corporate wrongdoing involving the Government as long as the Official Secrets Act is not abolished and the culture of secrecy in Government is not replaced by a culture of transparency. Since 2008, both Selangor and Penang have enacted Freedom of Information Enactments that gives the rakyat the right to demand information from the Government instead of giving the Government the right to hide information from the rakyat.

In Penang, we have replaced direct negotiations with open tenders for all major government contracts, and introduced public asset declarations for all elected State Executive Councillors. The Penang state government does not expect any praise for our political commitment and personal obligation to promote integrity in leadership and transparency. However neither did we expect to be pilloried for politicising the public declaration of assets and even allowing Ministers to be endangered if they are compelled to follow suit.

Is our crime or public safety or the performance of Malaysian police so appalling that even Ministers are not safe if they publicly declare public assets? Or should I be walking around under police protection since I am endangered as I have declared my assets. This endangered argument is nothing more than a silly pretext by Ministers who want to hide their assets from public view. Those who hide their assets behind this “endangered” argument only arouse public suspicion that they have unexplained or unaccounted assets.

But to return to the Act that is the subject of this Session, I am afraid to have to conclude that the WPA unfortunately appears to be the product of the old mindset in this country that values secrecy above everything else. I believe that it is now high time for a culture of openness and transparency to become the norm in Malaysia, both in the corporate world and in the world of Government.

The lack of protective safeguards and proactive investigation in the WPA makes no difference for genuine whistleblowers. As long as there is no leadership by example and no moral outrage against those who refuse to comply with international norms of proper behaviour and trustworthy conduct of public assets, laws such as the WPA will only be an empty symbol of our fight against corruption.

Despite laws such as the WPA, Malaysia has suffered a precipitous decline in the rankings of Transparency International’s Corruption Perception Index from 56 in 2010 to 60 last year. For this reason it is political will, national commitment and even personal obligation rather than a single law such as the WPA will determine whether integrity in leadership centred on an ethically based society can be established. Thank you.

(Speech by Chief Minister of Penang at the 4th Annual Corporate Governance Summit Kuala Lumpur on 6 March 2012)

I agree that WPA can be given more teeth. As it is, WPA does not protect against disclosure prohibited by OSA. Also nothing much can be done if enforcement agency (to which complaint made) does not take action. Yes, one can, under WPA, take the matter to the courts (assuming they are independent) but what if the enforcement agency says that it is not the one that is not taking action (for which recourse to the courts is possible) but it’s the Prosecutor/AG to whom the enforcement agency recommends action but in the Prosecutor’s exercise of prosecutorial discretion, none is taken, as for eg (so far) in NFC case (in respect to which the WPA provides no recourse to the courts)? Whatever short comings of the WPA, the real question is whether with the govt’s enactment of the WPA, it is still better (albeit by a notch or two in terms of corporate governance and the fight against corruption/abuse of power) than a situation before in which we have no WPA. That’s a pertinent question- comparing what’s before and what’s after WPA- knowing we can’t expect miracles from this govt to have something like New South Wales Public Interest Disclosure Act to cut its own nose!

The best legislation is of no use if people don’t implement it according to its spirit and objective. That much is clear but leaving that aside, on the more important question of whether the govt in having the WPA (in spite of its shortcomings) is still better (even by a notch or two) than the situation of not having it before, the answer is, in my opinion, a likely “yes”, it would be better, an improvement. However this opinion is subject to one important qualification. To explain that I have to quote here what LGE said: “And under the Act, (1) even if the report is made to a government enforcement agency, the protection can be revoked if the enforcement agency is of the opinion that the report “principally involves questioning the merits of government policy, including policy of a public body”, or (2) if the whistleblower commits an offence under the Act, such as disclosing the contents of his report to a third party.” I have divided his statement to 2 parts by inserting (1) and (2). To me (1) is no big shake; (2) is a big one ie if LGE were correct, for then the WPA is not bettering by a notch or two the cause of governance/accountability but worsening it.

Let me just explain why (1) is not a big shake. Firstly, many complaints on abuse of power (for which WPA protection is given) are based on some bureaucrats or beneficiaries of govt contracts/licenses abusing their favoured position pursuant to a govt policy that do necessarily relate to “questioning the merits of government policy”. But supposing one is notified by the relevant enforcement agency that one’s WPA protection is withdrawn by reason that, in its determination, the complaint relates to the merits of government policy and for some reason one is skeptical about resorting to the courts to reverse the enforcement agency’s determination, what is there to stop one from going to Opposition MPs or Alternative Media to publicize something of public interest/importance subject to the same rights and liabilities/penalties of other laws (as before the WPA)? If there’s nothing to stop one from so doing, then WPA has not made the situation worse. However if LGE were correct – that the whistle blower commits an offence under the Act (WPA) when he discloses the contents of his report to a third party like Opposition MPs or Alternative Media, then the situation has become worse than before the WPA. If the aggrieved can’t (after the WPA, unless under penalty of punishment) complain to independent MPs Alternative Media or NGO of an abuse that he could, before the WPA, then the WPA has made things considerably worse by taking away a right or privilege that has pre-existed before it! The question is whether this is true.

LGE’s comment in (2) is based on section 8. (1) of WPA (which according to version posted on the Net), states: ”Any person who makes or receives a disclosure of improper conduct or obtain confidential information in the course of investigation into such disclosure shall not disclose the confidential
information or any part thereof.” Of course if disclosure were otherwise made, then its an offence under the WPA that attracts “a fine of up to RM50,000 and imprisonment of up to 10 years”. LGE’s interpretation assumes the words ”Any person who makes disclosure will include the whistleblower so that he forfeits all rights of disclosing to 3rd parties like alternative media opposition MPs if the enforcement agency takes no action on his whistle-blowing. I think one can interpret it as referring to members of enforcement agency because they too not only receive such confidential information but also could make such disclosure, and they do so to the wrong doers complained against by the whistle blower, there will be reprisals on the whistleblower which is the intent of WPA to protect! It ought to exclude the whistle blower himself because of the words “in the course of investigation into such disclosure“ which may be interpreted as a reference to the enforcement officer who having received disclosure in the course of investigation could also make it ie. pass it on to others. The WPA is intended to protect whistle blower. It may not be effective or comprehensive in its objective but its altogether illogical to construe it as placing the whistleblower in a worse position of jeopardy than before it. Otherwise who wants to resort to WPA and face section 8(1)? May as well go straight to the alternative press or his opposition MP!

Th upshot of the above is that if the WPA [section 8(1)] does not impose an additional penalty and criminal sanction on a whistle blower when he resorts to both invoking the WPA and also later disclosing his own complaint/information to others like alternative media/opposition MP when he sees that the enforcement agency or Public Prosecutor is not taking action on his complaint, then the WPA is a positive one step forward even if it may not (due to other limitations mentioned by LGE) be a very big leap forward. Anything that gives an additional recourse of protection to whistle blowing of abuses of power is (other things being equal in the sense that the pre-existing position of whistle blower is not worsened by WPA) a step forward. It is not so only if it can be demonstrated otherwise that other things are not equal and the earlier position has become worse by it- for example the Malaysian version of Peaceful Assembly Act, which arguably would make it harder to assemble without penalty than before it.